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The Cost of Gadget Envy

I am really surprised with how well my blog readership has been growing. I always liked to think that there were people out there just like me, but that I just hadn’t met them in real life. With the power of the internet being able to bring communities together, I now know that there are frugal non-consumers, willing to forgo luxuries and to do things themselves, in order to become financially independent at a young age. I have readers like William that are making early retirement a reality. And in less than 9 years – lately it’s been looking like 7 – I will too.

Now, on to designing a lifestyle that is less stressful, less costly and allows you to become financially independent faster!

The New York Times recently ran a story called The “Busy” Trap about how Americans are addicted to being busy. They feel anxious and guilty when they aren’t working or running around like a chicken with its head cut off. You know these people. The funny thing is that this hectic way of living isn’t a necessity, it’s a choice. And I think choosing this way of life leads to an overall deleterious effect on happiness. Idleness is a good thing and we as a society have forgotten that.

For years, I had a BlackBerry that was provided to me by my employer. I work in the IT industry so the ability to be reachable any day, any time and any place is more or less a job requirement. I remember the first day I got a shiny new BlackBerry. I went home and put it on my coffee table. And then after awhile I noticed a little light on it started blinking, how awesome I thought, I just got an email! Now I could receive and send email right on my phone and I got sucked in. My BlackBerry became a CrackBerry. I was one of those people constantly checking my phone, constantly pecking away on the keyboard, constantly busy.

Then for various business reasons my employer decided to eliminate BlackBerrys for all employees. The choices they offered up were to:

Keep your BlackBerry device free of charge, get a personal phone plan for it, and receive a small monthly stipend.

Turn in your BlackBerry device, buy your own smartphone with a plan, hook it up to company email and receive a small monthly stipend.

Turn in your BlackBerry and receive a company provided non-smartphone at no cost.

Mr. Everyday Dollar chose option 3. I now have a phone that is the technological equivalent to a circa 1996 phone. In fact, it is eerily similar to the first phone I ever owned, a Motorola StarTAC (which was a great phone by the way!). I make calls and send texts. That’s about it because that’s all it can do. And I like that. It’s one step in removing myself from the busy trap – I don’t reach for my phone at every chance anymore because there’s nothing to do on it. And it’s also saving me major everyday dollars because I pay the grand total of zero dollars for it.

Why I won’t get an iPhone 5

If I did get an iPhone 5 I’d be out $200 for the phone. Then, the cheapest plans on AT&T, Sprint and Verizon are $85.00, $79.99 and $80.00 respectively.

So let’s say I chose option 2 where I bought my own phone and got a plan for it. I figure I would pay around $85.00 a month (including taxes) for a plan and upgrade my phone every 2 years at a cost of $200. With 5th grade math that’s a monthly cost of $93.33 and a 2 year total cost of ownership of $2,240.00.

On the other hand, by taking that $93.33 that I’m not spending and invest it, using a 7% rate of return, not having a smartphone saves me…wait for it…wait for it…

about $16,000 every ten years! And that exercise was done with the cheapest plan! I have friends who pay over $100 a month for their phone plans so that $16,000 becomes even greater for them. In any event, $16,000 is a nice chunk you can add to your Walk Away Money Pile (WAMP).

Ok, I will admit I am human. I do get gadget envy. I eagerly awaited the iPhone 5 release even though I knew I wouldn’t be getting one. I love to scroll through the sexy iPhone pictures on the Apple website. I like to watch sexy videos about all the cool features. When my gadget friends – who were pre-ordering the iPhone 5 at 2:00 A.M. – get theirs I will hold and cradle and play with it oohing and ahhing the whole time. I like technology, I love Apple – it is after all one of my largest stock holdings – but I won’t buy one.

However, if you must have a smart phone like the iPhone 5, the easiest way to save money is by using a prepaid carrier.

The reason why that iPhone from AT&T, Sprint and Verizon is $200 instead of $650 is because your steep $85.00+ plan that you are locked into for 24 months is subsidizing the cost.

Here’s what you do. You check out Boost, Cricket and Virgin Mobile (Net10 and Tracfone are good as well but don’t offer the iPhone) which offer prepaid month-to-month service. The plans are much, much cheaper but the kicker is that you have to pay the full price, $650 or so, for the iPhone. Again, using 5th grade math we can determine that using a carrier like Virgin Mobile with their $35.00 plan is the way to go.

The phone will set you back $650 and month-to-month service on the $35 plan for 2 years comes to $840.00. So the total cost of ownership over 2 years comes to $1,490.00 – which saves you at least $750 – over a similar plan from AT&T, Sprint and Verizon.

Will you be getting the new iPhone? What phone, plan and carrier do you use? Have you tried one of the month-to-month carriers?

Me too, but after a while the newness wears off. Being frugal with gadgets and always staying one step or revision behind gives you the convenience and time-saving of the technology without the large cost.

205guy

Hi, just followed you here from MMM. Here’s my recommendation: keep or buy an old iPhone (I’m still using my 3G) and get one of the pre-paid carriers. I just switched to PureTalk because they use ATT network, and plans start out at $10/ month–but no data. I have wifi at home and at work, so all I’m losing is internet/email/maps when away from home. If you absolutely need data, their unlimited talk/text and 300MB data is $45. Way cheaper than the equivalent on ATT. What’s the catch? I don’t know yet. I assume they have lower priority on the ATT cell towers, so quality or dropped calls might be worse when the network is busy.

You are right. The pre-paid carriers are the way to go. I thought I’d mention I had been looking into Republic Wireless. They offer a $20 plan that includes unlimited everything (!). The catch is that they expect you to use your home/work wifi for the majority of your usage and they only offer one phone. I’ve read it’s a little buggy, for instance you might drop calls switching from wifi to cellular, but for $20/month I don’t think anything beats it.

The one thing I miss is GPS from my smartphone days but I’m going to pick one up off Craigslist; they sell for less than $20.

Slackerjo

I will never understand how a damn cell phone becomes and extension of a person. I have no desire to be in constant 24/7 contact with people. I deal with people all day and I am exhausted by 5pm. My life does not suck so much that I need a constant stream of validating text messages from family/friends or a silly app to waste time. I suppose if someone can afford the latest and greatest gadget and are not in debt over it, there is no harm, but if I have to hear “you should get a…” one more time, I may punch someone.

I think you make a good point. Idleness, spending time alone and reflecting is really important. People don’t do that anymore because of being connected 24/7. I found that weaning myself off a smartphone was actually a little hard; I felt a little anxiety that I wasn’t checking email or surfing the web. And now when I’m out with friends or coworkers I really notice how much time others spend on their smartphones not interacting (and I used to be guilty of that too). My phone doesn’t leave my pocket because there’s nothing to do on it!

Hank Coleman

I love buying the newest gadgets, but I draw the line in paying full price. I don’t mind paying $200 for a new phone, but I’m not going to pay full retail price. I have the iPhone 4S and typically wait one or two models, skipping them, and then getting the latest gadget when my two year renewal period is up.

Right, never pay retail! When the iPhone 5 came out last Friday it was selling on eBay for well over $1,000. I don’t mind staying a release, or more, behind on electronics. It’s much cheaper and typically the newer models don’t have additional ground-breaking technology I need to have.

Me as well! Isn’t it awesome how that feeling of needing something – to fill that instant gratification hole – can be so intense, yet subsides or goes away altogether over time. Good stuff.

Linda in Mass

I paid $80 for a KinII phone from ebay. It does not have a data plan but does have WIFI. If I am in a hotspot, I can get online, if not, I just don’t go online. It’s a nice feature to have without paying the data plan. Also, I am not locked into a 2 year plan with Verizon.

Using Wi-Fi instead of cell data is smart, very smart. The reason why Republic Wireless (http://www.republicwireless.com) can offer unlimited talk/text/data for $19/mo. I am very interested in trying their service.